European governments are expanding fuel tax cuts, subsidies and energy measures as record petrol and diesel prices increase pressure on households and businesses across the region.

France, Germany and Spain are among the countries introducing or extending support as governments respond to disruptions linked to the wars in the Middle East and Ukraine. The European Union is also facing uncertainty over global diesel supplies amid possible US restrictions on exports.

The Organisation for Economic Co-operation and Development said seven of the 10 countries that have taken the largest number of measures to limit the economic impact of higher energy prices are EU members.

Europe was already facing energy challenges before the conflict involving Iran. Russia’s war in Ukraine disrupted supplies and contributed to sharp movements in European energy markets. The EU imports nearly all of the oil it consumes and about 85% of its natural gas, while imports account for 57% of the bloc’s overall energy needs, according to Eurostat.

Drivers are now facing particularly high diesel costs. Campaign group Transport & Environment estimates that EU motorists are spending an additional €203 million a day on diesel.

EU leaders have given member states temporary flexibility to provide state aid to households and energy-intensive sectors, including agriculture, transport and fishing. Governments have also been given limited flexibility under EU spending rules for investments aimed at strengthening energy security and reducing dependence on imported oil and gas.

European Commission President Ursula von der Leyen said higher energy prices and borrowing costs were putting pressure on households and businesses. She called for greater investment in domestic clean energy, including renewable power, nuclear energy and biomethane.

France has announced a €450 million package expanding assistance for fuel users and energy-intensive businesses. The government said 5.5 million workers who drive more than 30 kilometres on a round trip to work, or more than 8,000 kilometres a year for professional purposes, will qualify for €100 fuel payments through the end of the year.

Fuel subsidies for farmers, fishers and construction companies have also been extended. Energy vouchers ranging from €48 to €277 will be distributed three months earlier than planned to help 5.8 million households meet winter energy costs.

French President Emmanuel Macron has also asked the European Commission to consider relaxing some fuel quality requirements to increase diesel and kerosene production. He has proposed raising the EU limit for conventional biodiesel in standard diesel from 7% to 10%.

Germany has agreed to revive fuel tax cuts that expired at the end of June. From October 1 until the end of December, petrol and diesel prices will be reduced by 17 cents per litre, at a cost of €2.5 billion. Berlin also plans discussions with the oil industry over a possible fuel price cap from January.

Spain has extended fuel tax reductions introduced in March as part of a €5 billion support package. The current reduction is 5 cents per litre, with an automatic increase to 20 cents if annual fuel-price inflation exceeds 15%. Subsidies for transport firms, farmers, livestock producers and fishers have also been extended.

EU countries have also been drawing on strategic oil reserves after International Energy Agency members agreed to release 400 million barrels from emergency stockpiles.

At the same time, Europe continues to increase renewable energy production and shift industries toward electricity as it seeks to reduce dependence on imported fossil fuels.

Malta and Cyprus have secured places among the world’s 10 highest-ranked tax jurisdictions for people considering moving abroad, while Germany has been placed last in a new global comparison.

The ranking by Global Citizen Solutions (GCS) assesses 48 jurisdictions using 11 indicators grouped into tax burden, tax structure and investment migration. The investment migration category considers options available to people seeking residence or citizenship.

A higher score indicates more favourable conditions for internationally mobile individuals. Tax optimisation refers to the legal arrangement of finances to reduce tax liabilities.

Malta and Cyprus each scored 82 out of 100 for tax burden and 63 for tax structure. Malta received a score of 83 for investment migration, compared with 78 for Cyprus. Malta ranked sixth globally, while Cyprus came 10th.

GCS said the two countries achieved their positions through preferential tax regimes rather than low headline income tax rates. Their systems can provide favourable treatment for certain types of foreign income earned by people relocating to the countries.

Monaco, with a score of 68.6, Georgia at 68.3 and Bulgaria at 62.8, completed the top five European jurisdictions. After those countries, European scores fell below 60, with most placing outside the global top 20.

Germany ranked 48th and scored only 17 for tax structure. GCS identified the taxation of residents’ worldwide income, inheritance tax and exit tax as factors contributing to its position.

Denmark scored 30.4, Spain 36.9, France 37.7 and Norway 38.4. The United Kingdom was the next-lowest European jurisdiction, with a score of 50.9.

Italy recorded the highest score among Europe’s five largest economies at 56.9, placing ninth in Europe and 26th globally. Switzerland scored 58.2, followed by the Netherlands at 51.2. Turkey scored 56.9, Hungary 54.9, Sweden 54.1 and Ireland 53.1.

The separate tax burden measure covers personal income tax, capital gains tax on listed securities, wealth tax and inheritance tax. Monaco led Europe with 93, followed by Bulgaria at 92 and Andorra at 89. Malta and Cyprus both scored 82.

Tax structure focuses on foreign income and taxation affecting people who leave a country. Malta and Cyprus shared the highest European score of 63, while Germany recorded 17.

The report said tax rates and tax structures can operate independently, meaning a country with relatively low taxes may still have less favourable rules for foreign income or people relocating overseas.

Globally, the UAE ranked first with 82.7, followed by Antigua and Barbuda at 82.2, Paraguay at 77.2, Hong Kong at 76.9 and the Bahamas at 76.2.

The report also compared tax scores with quality-of-life rankings. Sweden, Germany, Denmark and Norway ranked highly for quality of life but much lower for tax optimisation.

Seven jurisdictions stood out for combining relatively favourable tax conditions with strong quality-of-life rankings: Malta, Cyprus, Portugal, Switzerland, Uruguay, Costa Rica and Mauritius.

The findings suggest that people considering relocation may assess tax structures alongside public services and wider living conditions, rather than focusing solely on headline tax rates.

European shares opened lower on Thursday as investors assessed recent swings in oil prices and rising US bond yields, with concerns about inflation and the economic outlook weighing on market sentiment.

Germany’s DAX fell 0.49% to 25,287.42, while France’s CAC 40 declined 0.37% to 8,093.68. The Euro Stoxx 50 was down 0.41% at 6,273.71 at the time of writing.

Asian markets were mixed earlier in the session. Japan’s Nikkei 225 gained 1.3% in morning trading to 65,883.41, helped by gains among some chipmakers as investor interest in artificial intelligence continued to support the technology sector.

Australia’s S&P/ASX 200 dropped 0.7% to 8,700.50. Hong Kong’s Hang Seng Index declined 0.5% to 24,715.95, while the Shanghai Composite fell 0.8% to 3,902.33. South Korean markets were closed for the Chuseok autumn harvest holiday.

Oil prices also moved lower. US crude fell 0.82% to $91.40 a barrel, while Brent crude, the international benchmark, declined 0.83% to $102.22.

Brent remains significantly above the roughly $72 a barrel level recorded before the war with Iran began. Investors remain concerned that the conflict could restrict oil supplies from the Middle East for an extended period.

US and Iranian officials, along with mediators, have continued discussions aimed at resolving the conflict, although no concrete agreement has emerged.

US bond yields weigh on Wall Street

US bond markets came under pressure overnight after stronger-than-expected economic data raised concerns that inflation could remain elevated.

The S&P 500 fell 0.8%, while the Dow Jones Industrial Average lost 352.10 points, or 0.7%, to 51,511.59. The Nasdaq Composite declined 308.24 points, or 1.1%, to 26,936.04.

The yield on the benchmark 10-year US Treasury note rose to 5.10% from 4.96%. It briefly approached 5.14% on Wednesday, a level not seen since 2007, before the global financial crisis sent borrowing costs sharply lower.

Higher Treasury yields can put pressure on equities and other assets by making borrowing more expensive and reducing the relative appeal of riskier investments. Recent increases have also reflected concerns over inflation, US government borrowing and the country’s rising debt burden.

A preliminary survey showed US business activity expanding at its fastest pace in more than five years, adding to concerns about price pressures.

The Federal Reserve raised its short-term interest rate last week for the first time in three years as inflation remained above its 2% target. Fed Governor Michael Barr said further increases “are likely to be needed” to bring inflation under control.

In currency markets, the dollar slipped to 157.94 yen from 158.30 yen. The euro was little changed at $1.1382, compared with $1.1388 previously.

The weak yen remains a concern for Japan because higher oil prices increase costs for the country’s import-dependent economy.